The optimism toward TSMC's bottom line comes after the world's largest contract chip maker reported a record high in net profit for the second quarter of this year and gave a third-quarter guidance in which the company could post a 12.6-14.2 percent sequential increase in consolidated sales.

During the April-June period, TSMC's net profit rose 24.7 percent from a quarter earlier to NT$59.70 billion (US$1.99 billion), the highest level in the company's history. Its earnings per share (EPS) for the second quarter stood at NT$2.30, up from the first quarter's NT$1.85.

TSMC said that with 4G services gaining popularity in the global market, demand for its high-end technology, including the 28 nanometer and 20nm processes, is expected to remain solid in the second half of this year.

Citigroup Global Markets is one of these upbeat foreign institutional investors and expects TSMC to benefit from its 20nm process to further strengthen its bottom line.

As a result, the brokerage has raised its forecast for TSMC's EPS for 2014 and 2015 by 7 percent and 2 percent, respectively, to NT$9.87 and NT$10.63. In 2013, TSMC's EPS stood at NT$7.26.

Citigroup has also raised its target price on TSMC shares to NT$156 from NT$154, while leaving a "buy" recommendation unchanged.

Shares of TSMC fell 0.80 percent to close at NT$123.50 on the Taiwan Stock Exchange Friday after a 4.6 percent drop a session earlier as investors continued to pocket gains built up in the stock in recent sessions.

CIMB Securities has also held a similar optimistic attitude toward TSMC.

The brokerage has raised its forecasts of TSMC's EPS for 2014 and 2015 by 7 percent and 9 percent, respectively, to NT$9.61 and NT$10.51, while raising its target price on TSMC shares to NT$152 from NT$130.5.

Meanwhile, Barclays Capital said that solid demand for smartphones, wearable devices and the Internet of Things will keep boosting TSMC's earnings over the next few years.

The brokerage said it has upgraded its forecasts of TSMC's EPS for 2014, 2015 and 2016 by 5 percent, 3 percent and 2 percent, respectively, to NT$9.65, NT$10.67 and NT$11.57.

Barclays has maintained a target price of NT$170 on TSMC shares and left an "overweight" rating on the stock unchanged.